MaineHousing under increasing scrutiny

State Treasurer Bruce Poliquin had been on the Maine State Housing Authority board for about half a year before he started to see things he really didn’t agree with.

Early last summer, the board was asked to approve the scoring criteria housing authority staff uses to determine what affordable housing proposals will get tax credits and approval.

Poliquin recalled looking through 45 pages of criteria, wondering why extra points were awarded to projects that included solar hot water heaters. Or why extra points went to construction companies that offered their workers health insurance. Or job training programs.

“I was very uncomfortable with these rules,” said Poliquin.

The criteria were a remnant of the prior Democratic administration that had controlled the Legislature for decades and governor’s office for the previous eight years. They reflected priorities not shared by Poliquin and, the treasurer said, the new administration of Republican Gov. Paul LePage.

“I think it’s pretty clear that over the years there’s developed a culture, for some reason, of wanting to use Maine State Housing to advance an agenda that’s different from our mission,” said Poliquin. “Our mission is not to promote a social agenda; our mission is to get as many people as humanly possible out of those shelters and into affordable housing.”

Last October, LePage appointed and the Republican-controlled Legislature confirmed four new members of the authority’s board, including Chairman Peter Anastos, a well-known Maine developer and hotelier.

Relations between Maine State Housing Authority Executive Director Dale McCormick and the board quickly went south. Poliquin, in particular, has consistently beat the drum about perceived problems at the authority. He has been joined by reports from the Maine Wire, a new offering of the conservative Maine Heritage Policy Center — and by the center, itself.

McCormick, a longtime Democratic leader who had served as a state senator, then state treasurer, before taking over the authority in 2005, said she had foreseen there would be change demanded by the new administration, and her new board.

“I knew there would be policy changes, but I didn’t know there would be this much meanness,” said McCormick. “I didn’t see coming what appears to be a coordinated effort between the board and the Maine Heritage Policy Center. I hope things get better.”

The politics around Maine State Housing have become intense. On Friday, the Legislature’s Government Oversight Committee voted unanimously to have the nonpartisan Office of Program Evaluation and Government Accountability do a “rapid response” investigation into MaineHousing, looking into how it has spent money on vendors and on its contributions to groups.

Even a casual observation of the board meetings (audio recordings of the latest are online) displays a level of dysfunction that’s rare, even in government. It often seems as if participants are speaking a different language, with obvious frustration on all parts.

But cut through the sound and fury, through the press releases and reports, through the offense and defense, and what are the real issues?

It comes down to a clash of philosophies, a question of control, speed of change in government and a complicated organization that uses complex federal programs and is far too difficult to broad-brush with simple concepts.

The critics

Poliquin’s first concern was with the standards that the scoring criteria — officially called the qualified allocation plan or QAP — were encouraging. He had conversations with LePage’s staff, and feelings there were similar, Poliquin said.

“This authority was using taxpayer money to move construction companies and developers to behave a certain way.” Poliquin said.

And, Poliquin added, he felt those requirements were driving up the cost of the units. One thing that did not get points in the QAP was any efforts to contain the costs, Poliquin said.

“I was stunned — absolutely stunned,” he said.

In October, when other similarly minded individuals were appointed to the board, “we started to control the agenda,” said Poliquin.

Poliquin and the board raised issues with the Elm Terrace project in Portland, which had units that were projected to cost $314,000 apiece to develop. Under vociferous urging by the board, housing staff negotiated the price down to $265,000 a unit.

“This is completely apolitical — this is not a political agenda, this is how do you wisely spend a shrinking pool of money? It is my contention that spending $290,000 for a one-bedroom apartment is not the best way to help those people on the waiting list or in the homeless shelter.”

Poliquin said the board would like to have a policy debate on how much is appropriate to spend per unit. As the board pushed on the authority, it seemed like leadership there “circled the wagons,” Poliquin said.

And the board quickly came to realize it had limited statutory power over McCormick.

According to state law, only the governor can fire the executive director of the housing authority — and it has to be for specific reasons: “inefficiency, neglect of duty or misconduct in office.” Unlike other quasi-governmental bodies, the board cannot fire the executive director.

McCormick, a holdover appointment by former Gov. John Baldacci, has a term that expires in February 2014.

“The issue at the Maine Housing Authority is not about the current executive director, it is about creating a government structure that allows the board to oversee the wise spending of taxpayer dollars,” said Poliquin. “We currently can ask questions, expose this to the public, but we cannot force badly needed changes.”

According to statute, the board sets broad policy for the authority, in areas ranging from bonding to accepting projects.

It also controls the budget. Poliquin, however, noted that the authority has a $14 million budget, and it would be too much for the board to go over it line item by line item.

“It would take us forever to fully understand every line item,” said Poliquin. “Boards are not designed to do that; boards are designed to provide policy direction, and hire and monitor and evaluate an executive director to implement those policy directions.”

The Maine Heritage Policy Center started looking into the housing authority “without any reason other than they’re a state agency,” said CEO Lance Dutson. But, said Dutson, the center had an “unusual problem” getting information from the authority, and that sharpened the group’s focus.

One thing of note, said Dutson: the authority’s payroll increased by 30 percent since 2005, roughly three times the rate of growth compared to the rest of state government.

Overall, said Dutson, his issue is that the inner operations at MaineHousing are largely a mystery.

“I think whether you’re Republican, Democrat, Green Independent, or whatever, if you operate a government agency and the doors are closed and nobody pays attention, bad things happen,” said Dutson. “There’s just an awful lot of discretionary spending there.”

And as the board and the center turn up the heat, it appears McCormick reacts like she’s “under siege,” said Dutson.

In June, the center requested the housing authorities’ expenditures and only recently got that data. However, it only got the list of vendors, not the amount spent or when it was spent.

The vendor list included a number of hotels around the country, party companies, masseuses and others, said Dutson.

“I’m totally open to the idea that some of that makes sense, but there’s tons of it,” said Dutson.

There will never be enough money in Maine to take care of people who are needy, said Dutson.

“That makes discretionary spending something that should be scrutinized all the much more,” said Dutson.

Dutson said he would like to see a full opening of the authority’s expenditures.

LePage has mostly stayed out of the fray, though he has said several times that he would like greater control over the housing authority.

His spokeswoman, Adrienne Bennett, said LePage “does believe there should be greater accountability in quasi-state agencies.” That’s something the administration is exploring, said Bennett.

“What it really comes down to is there is no oversight right now — when you have taxpayer dollars being used and programs that potentially affect hundreds of thousands of Mainers, there should be greater accountability than there is right now,” said Bennett.

The governor, she said, does support legislation by Senate Majority Leader Jon Courtney, R-Springvale, LD 1778, that would remove the housing authority director’s four-year term, and specify that the executive director serves at the pleasure of the board of directors.

“The purpose of that shouldn’t be to fire Dale McCormick, the purpose of that should be so Dale McCormick understands she has a boss,” said Dutson.

The defense

“I would hate to see the board have firing and hiring power over the executive director,” said Carol Kontos.

Kontos is a former state senator, former House majority leader and, until last October, the chairwoman of the housing authority’s board of directors.

Kontos, a Democrat, said the legislation setting up the autonomy of the authority’s executive director was very deliberate. The housing authority is, for all intents and purposes, a bank. Using a ranking system, it gives out money, essentially, through bonding and federal tax credits.

Kontos said when she chaired the legislative committee that oversaw the housing authority, there were bills submitted to have the head of the agency serve “co-terminously” with the governor — when there’s a new governor, there would be a new executive director. Those bills were always rejected, Kontos said.

“We did not want the housing authority and its access to all of this influence and money and bonding authority to be politicized as an arm of the governor — regardless of who the governor was,” said Kontos.

That could open the door to having the governor direct the head of the housing authority to make sure the QAP was written in such a way as to benefit their friends who were looking to get the credits for development.

The board would have broad policy debates, said Kontos. It would debate things like having green standards in the QAP, whether to pursue historical preservation projects for affordable housing — all the sorts of things that the previous administration and board supported, but the current leaders do not.

The current board, said Kontos, is more combative than any board she’s seen.

“All of them come from the private sector. I think they need to give themselves time to understand that the role of a public housing authority is not identical to the environment in which they’ve always worked,” Kontos said.

The new board, representative of the new administration and Legislature, is bringing its priorities to state housing, said Kontos, but they need to be patient.

McCormick agreed that the QAP requirements that the current administration finds troublesome were the product of the last administration — and the board it seated.

“It was the policy of the last administration and the last board to try to hold down insurance premiums and Medicaid costs for everyone by encouraging the builders and contractors who build affordable housing with taxpayer money to offer health insurance,” said McCormick.

LePage, said McCormick, made it clear he didn’t support those criteria, and both the board and the governor has to sign off on the QAP.

So Maine State Housing made changes to the QAP. It changed contractor standards, increased developer fees and eliminated the points awarded to nonprofits, all per the administration, said McCormick.

“There’s been a change — we used to do it one way, now they want it another way,” said McCormick.

When the board or administration has pushed for changes, she has accommodated, McCormick said. The board, she said, controls the QAP, the rules made by the authority and the bonding.

“They have a lot of power. So pretty much what’s left here is what you would think staff would do, which is carry out the policies of the board.”

In addition, the authority is audited each year by its auditor, Baker, Newman & Noyes, by the board’s auditing committee, by federal agencies including the Internal Revenue Service, Housing and Urban Development, Department of Energy and Health and Human Services, as well as the credit rating agencies, McCormick noted.

And while the new board has been critical about the cost of units, and has charged that the authority hasn’t contained costs, that’s not the case, said McCormick. In recent years, the authority used the QAP to lower the cost of housing — relaxing the requirements for the number of three-bedroom units, for example.

“The facts don’t cease to exist just because they’re ignored,” said McCormick.

“It’s so easy to attack and so hard to explain a complicated program,” said McCormick. “Our philosophy is we try to maximize every dollar, squeeze as many units as we can out of it.”

For example, she said, looking at the costs for Elm Terrace in downtown Portland, Poliquin has criticized the per-unit cost as being more expensive than the average single family home in Maine. But when you take out factors required in multifamily housing, it costs less.

McCormick continued: “In the ’70s, affordable housing was shabbily built on the edge of town. It didn’t work, it fell down, it caused problems. Now we know how to build affordable housing so it lasts, and we do more than one thing with a dollar.”

“Not only are we building an affordable unit, sometimes we’re restoring a historic or cultural building that helps the economic development of that town, and we’re building in the center of downtown, which keeps taxes down, and we’re building it for energy conservation, which helps the environment.”

On other points raised, McCormick and her staff have responses. Payroll grew because MaineHousing had to add staff to quickly handle extra recovery act money from the federal government. The various vendors questioned by the Maine Heritage Policy Center included hotels where staff members were at conferences. Many of the expenses predated McCormick’s time at the helm, as well. Fees for masseuses, Weight Watchers and other health-related activities were part of the agency’s wellness program.

And, said McCormick, in three of the last seven years, the wellness program has led to a zero percent increase in insurance premiums.

As to the agency’s transparency, Communicators Director Peter Merrill said the heritage group’s request for 13 years of records entailed 800,000 financial transactions. They all had to have personal information redacted, and had to be double-checked, he said. Staff members were working on Sunday mornings to meet the request, he said. And MaineHousing and the center had a lengthy back-and-forth that the agency detailed, going back to February 2011.

McCormick said she has not been asked to retire or quit MaineHousing, by the board or the governor. If she were asked, she would not, she said.

“I’m not a quitter,” McCormick said.

She doesn’t think her position should be open to removal by the board, as spelled out in Courtney’s bill. It would make her position more open to political pressure, she said.

If the law changes, she said, she is concerned that she would be fired.

“I think that’s the goal of the legislation,” she said.

For her part, McCormick said she hopes “things get better.”

“Hopefully, they’ll tire of complaining and criticizing the policy of the past administration and own and go forward with their own policies — which MaineHousing will implement, which I will implement,” said McCormick.